Ethereum is the world's second most common cryptocurrency and a decentralized smart contract framework. Although everything can be built on Ethereum, from supply chain tracking systems to decentralized markets to digital art marketplaces, DeFi — Decentralized Finance — is currently the most common offering.
Ethereum Use Case
Ethereum was designed to fix some of Bitcoin's shortcomings. Though Bitcoin is ideal for storing wealth (it is the world's most secure cryptocurrency), it lacks advanced features. Smart contracts are not sponsored, however you can send and receive transactions and perform other basic functions. This is where Ethereum enters the image.
Ethereum allows for a high degree of customization, allowing developers to build items such as,
Dapps (decentralized applications)
Complex smart contracts
Tokens
Anyone can create and launch something on Ethereum because it is decentralized. Decentralization has this meaning, and it's one of the reasons Ethereum has become so popular.
Advantages of Ethereum
There are a few characteristics that distinguish Ethereum from other smart contract platforms.
Decentralization
After Bitcoin, Ethereum is the world's second most decentralized cryptocurrency. While certain individuals and organizations wield significant power over the project, such as Vitalik Buterin and ConsenSys, there is no centralized authority with absolute control.
This distinguishes it from other smart contract systems such as NEO and Tron. The issue with these networks is that the network is controlled by a single entity. There is the possibility of a transaction being rolled back or an account being frozen if it comes down to it.
Is that a possibility? No, it's not true. It's very doubtful, but not impossible. That is the issue with centralization, which is why a decentralized network like Ethereum is the best way to avoid interference.
Robust developer community
Ethereum has the world's biggest developer group, far bigger than Bitcoin. As a result, Ethereum has a significant advantage over other protocols.
Blockchain-based cryptocurrencies are still a relatively young technology, and much work remains to be done in order to make crypto useful to the average citizen. With so many developers, Ethereum is more likely to be the first project to find product-market match, resulting in widespread adoption.
Interoperability
When you create an app on Ethereum, you can link it to hundreds of other protocols right away. This is referred to as money legos in the Ethereum culture. Although the video below is a little out of date, it does a decent job of demonstrating how protocols can communicate.
There have recently been popular financial products designed and launched on Ethereum in a matter of weeks. This is only possible because these protocols will bind to existing infrastructure rather than having to construct it from the ground up.
Disadvantages of Ethereum
Ethereum is a fantastic forum, but it is far from flawless. Here are three major issues that Ethereum is currently dealing with.
Slow speeds
Decentralized protocols, such as Bitcoin and Ethereum, are notoriously sluggish. Bitcoin has an average transaction speed of 7 TPS, while Ethereum has a speed of 15 TPS. That's twice the speed of Bitcoin, but it's not nearly fast enough.
The Ethereum network has recently become extremely congested due to the exploding popularity of DeFi and, in particular, yield farming. Transaction fees spiked to 100 times or more their usual rate for brief periods, resulting in exorbitant charges.
A simple transaction, for example, could cost $5 to conduct, while a moderately complicated transaction involving a smart contract could cost $50 or $100.
Immutability?
A hacker exploited a loophole in the MakerDAO smart contract in 2016, when Ethereum was just getting off the ground, and made off with around $50 million in ETH.
Instead of allowing this to happen, the Ethereum group agreed to fork the network in order to "undo" the hack. Although this occurred about half a decade ago, the intriguing question is whether it could be repeated. And the response is most likely no. Since then, Ethereum has expanded significantly, and getting all of the influential players to agree to a rollback will be even more difficult.
This rollback, though, lives on in everyone's mind, to a greater or lesser degree. The immutability of Ethereum remains a mystery, particularly when compared to a cryptocurrency like Bitcoin.
Programming Language
Solidity is a programming language used by Ethereum developers to build apps and tokens. This is a brand-new programming language with a number of well-known flaws.
In practice, this means that developers may have to write smart contracts in a new language that they may not be familiar with. As a consequence, it's relatively normal for smart contracts to be written with security flaws. Some of these flaws are difficult to spot, and even after a smart contract is audited (a third party tests the code for security), a hacker might find an exploit!
Other smart contract platforms make use of programming languages that are geared toward developers. Cardano, for example, is hoping that their Marlowe programming language will make creating exploit-free smart contracts simpler.
